Yung Fu Development Co., Ltd. violated the Fair Trade Law for false advertising of pre-sale houses

Chinese Taipei

Case:

Key Words:

Pre-sale house, extension of balcony, false advertisement

Reference:

Fair Trade Commission Decision of December 8, 2005 (the 735th Commissioners’ Meeting); Disposition Kung Ch’u Tzu No. 094133

Industry:

Real Estate Investment (6611)

Relevant Laws:

Article 21, Subparagraph 1 of the Fair Trade Law

Summary:

1. The complainants in this case indicated that they have signed sales and purchase agreements of pre-sale houses with Yung Fu Development Co., Ltd. (hereinafter referred to as Yung Fu Company) on July 15, 2004. They discovered later that the page 31 of the “Sung Chian Road Yung Fu Yi” pre-sale houses advertisement at issue has included the outdoor balcony as part of the living room. The balcony was not clearly marked and indicated in the advertised diagram. Such conduct has violated Article 21, Paragraph 1 of the Fair Trade Law.
2. Upon investigation, the Fair Trade Commission (FTC) found that the “Decoration Layout Reference for Unit C” in page 31 of the advertisement at issue and the model unit displayed at the selling site indeed have included balcony into indoor uses. Furthermore, the photocopy of construction plan for unit C provided by Yung Fu has ascertained the indoor use of balcony. With regard to the transaction at issue, Yung Fu Company probably has clearly told the complainants the areas of main building, auxiliary buildings (balcony, canopy), and common uses, and also written down clearly in the sale and purchase agreement that Yung Fu will not liable for any relevant obligations that arise in the future. However, the advertisement at issue has marked balcony with dotted lines in the “Decoration Layout Reference for Unit C” and such design has violated the regulation of extending balcony for indoor uses. It is difficult for the ordinary consumers to learn that the interior layout of the advertisement at issue has violated Article 25 of the Building Code. Even if Yung Fu Company carried out the second construction and handed the building corresponds with the advertisement, nevertheless there is still a possibility that the extension was found and dismantled. Therefore, the representation or symbol in the advertisement is substantially different from the understanding of ordinary consumers, and such difference is beyond the limit acceptable by ordinary consumers. Hence, Yung Fu Company has made false and misleading representation as to the design of balcony in “Decoration Layout Reference for Unit C” in page 31 of the “Sung Chian Road Yung Fu Yi” pre-sale houses advertisement and the model unit displayed at the selling site. It is substantiate to conclude that such conduct has violated the provision of Article 21, Paragraph 1 of the Fair Trade Law.
3. Taken into consideration the motivation, purpose and expected improper benefit of the unlawful acts of Yung Fu Company; the degree and duration of the act’s harm to market order; benefits derived on account of the unlawful act; scale, operating condition and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the Central Competent Authority; types of, number of, and intervening time between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation, and other factors, therefore, Yung Fu Company is ordered to cease the unlawful acts and a fine of NT$ 500,000 is imposed according to the anterior paragraph of Article 41 of the Fair Trade Law.

Summarized by Wang, Horng-Shiuan;
Supervised by Yeh, Tuen-Fu

Appendix:
Yung Fu Development Co., Ltd.’s Uniform Invoice Number: 80506451